Reason Foundation

North Carolina Moves Ahead with Franchise Reform

Unconfirmed reports are coming in that North Carolina Gov. Mike Easley has signed bill to create statewide video franchising.
Easley reportedly signed the bill, H2047, Thursday afternoon, after the North Carolina Senate passed the bill unanimously. The House had passed the bill 111-5, according to the Associated Press.
In a unique approach, the North Carolina bill does away with franchise fees as a separate "tax," and instead subjects video services to the same 7 percent sales tax applicable to other goods and services. The bill stipulates that portion of the revenues collected from the tax on video services go toward broadband development.
As such, it may amount to the least discriminatory compared to the measures passed in other states, which retain many of the same basic terms of local franchise agreemens, just simply codify them at the state level. In North Carolina's case, the approach is purely a consumption tax–technology or right of way issues to not enter. Thus, even subscribers to satellite services must pay the tax.
The vote also continues the bi-partisan momentum for franchise reform. Although Republican legislators pushed through the first franchise reform measures, Ealey is a Democrat and both houses of North Carolina's General Assembly are controlled by Democrats.